Tesco Corp.. v. Weatherford Int'l Inc.

• Decision Date: 05 August 2010
• Docket Number: Civil Action No. 08-cv-2531.
• Citation: 722 F.Supp.2d 755
• Parties: TESCO CORPORATION, Plaintiff, v. WEATHERFORD INTERNATIONAL INC., National Oilwell Varco, L.P., Offshore Energy Services, Inc., and Frank's Casing Crew & Rental Tools, Inc., Defendant.
• Court: U.S. District Court — Southern District of Texas

722 F.Supp.2d 755

TESCO CORPORATION, Plaintiff,
v.
WEATHERFORD INTERNATIONAL INC., National Oilwell Varco, L.P., Offshore Energy Services, Inc., and Frank's Casing Crew & Rental Tools, Inc., Defendant.

Civil Action No. 08-cv-2531.

United States District Court, S.D. Texas,Houston Division.

Aug. 5, 2010.

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COPYRIGHT MATERIAL OMITTED.

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Glenn A. Ballard, Jr., Andrew William Zeve, John F. Luman, III, Mateo Z. Fowler, Bracewell & Giuliani LLP, Houston, TX, for Plaintiff.

Lucas Thomas Elliot, Paul E. Krieger, Morgan Lewis & Bockius, Robert M. Bowick, Jr., Raley & Bowick, LLP, Bruce R. Coulombe, Guy E. Matthews, The Matthews Firm, Frank Zugin Lin, Matthews, Lawson & Bowick, PLLC, John Wesley Raley, III, Robert M. Bowick, Jr., Raley & Bowick, L.L.P., C. James Bushman, Loren G. Helmreich, Browning Bushman, Lester L. Hewitt, David R. Clonts, James L. Duncan, III, Akin Gump et al., Sarah J. Ring, Akin Gump Strauss Hauer and Feld, LLP, Houston, TX, for Defendant.

MEMORANDUM AND ORDER KEITH P. ELLISON, District Judge.

Pending before the Court are the Motion to Stay the Case Until Issuance of Reexamination Certificates (Doc. No. 195) (“Motion to Stay”) and the Motion to Admit Reexamination Records into Evidence at Trial (Doc. No. 196) (“Motion to Admit”), both filed by Defendant Frank's Casing Crew & Rental Tools, Inc. (“Frank's”). Both Motions have been fully briefed. Also pending are the Motion for Partial Summary Judgment Limiting Liability Due to Plaintiff Tesco's Failure to Mark Pursuant to § 287(A) of the Patent Act (Doc. No. 202) (“Motion for Partial Summary Judgment”) and the Motion for Summary Judgment of Patent Invalidity for Tesco's Admission of Prior Public Use of the Claimed Invention (Doc. No. 225) (“Motion for Summary Judgment”) of Defendant National Oilwell Varco, L.P. (“NOV”).

Having considered the parties' filings, all responses and replies thereto, and the applicable law, the Court finds that the Motion to Stay should be denied, the Motion to Admit should be denied, the Motion for Partial Summary Judgment should be granted in part and denied in part, and the Motion for Summary Judgment should be denied.

I. BACKGROUND ¹ A. Motions to Stay and to Admit

Plaintiff Tesco Corporation (“Tesco”) filed a complaint in this court on August 19, 2008, against Defendants Weatherford International, Inc. (“Weatherford”), NOV, Offshore Energy Services, Inc. (“OES”)

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and Frank's. The claims in the case arise from Defendants' alleged infringement of two Tesco patents concerning a casing running tool or casing drive system used to pick up, rotate, and “run” casing in oil wells.

Tesco was granted United States Patent No. 7,140,443 (the “'443 Patent”), entitled “Pipe Handling Device, Method, and System,” in November 2006, and United States Patent No. 7,377,324 (the “'324 Patent”) (collectively, the “Tesco Patents”), with the same title, in May 2008. ² Tesco asserts that various casing running tools of each Defendant have infringed seven claims of the ' 443 Patent, and six claims of the ' 324 Patent. (Doc. No. 194.) Tesco also asserts that Defendants knew of the Tesco Patents and willfully disregarded them.

In October 2008, Weatherford, but not NOV, OES, or Frank's, filed a request for inter partes re-examination of the '443 Patent with the United States Patent and Trademark Office (“PTO”). (Doc. No. 54, at 1.) A few weeks later, Weatherford, again acting alone, filed a request for inter partes re-examination of the '324 Patent with PTO. (Doc. No. 60, at 1.) PTO granted both re-examination requests. In January and February 2009, PTO issued its first Office Actions in the two re-examinations, rejecting fifty-eight of the seventy claims in the '443 Patent (Doc. No. 54, at 1) and thirty-three of the thirty-four claims in the '324 Patent (Doc. No. 60, at 2).

On the same day it requested re-examination of the '443 Patent, Defendants together filed a Motion to Stay Proceeding Pending Re-examination of the Patent-in-Suit ³ (“First Motion to Stay”) (Doc. No. 34) with this Court. The Court denied the First Motion to Stay in February 2009. (Doc. No. 61.)

In January 2010, PTO issued an Action Closing Prosecution (“ACP”) in each of the re-examinations of the Tesco Patents. (Doc. No. 195, at 3.) Of the seven claims in the '443 Patent asserted against the Defendants, PTO rejected five and confirmed two. ( Id., at 5.) Of the six claims in the '324 Patent asserted against the Defendants, PTO rejected five and confirmed one. ( Id.) All the confirmed claims include a “channel key” limitation that is absent from all of the rejected claims. ( Id., at 3.) In March, 2010, PTO vacated the ACP regarding the re-examination of the '324 Patent at Tesco's request as a result of incorrect cross-references within the document. ( See Doc. No. 215-1 at 4-6; Doc. No. 220-1 at 2.) PTO has not yet issued a corrected ACP regarding the reexamination of the '324 Patent, and PTO has not issued a Right of Appeal Notice ⁴ regarding either of the Tesco Patents.

Since PTO released the ACPs, this action has made significant progress towards trial. This Court issued its Markman order in January 2010 (Doc. No. 176). The deadline for expert reports passed in May 2010. Discovery is now closed, dispositive motions have been filed, and the case is set for trial on October 25, 2010.

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The Motion to Stay and Motion to Admit currently before the court were filed by Frank's after the ACPs were issued. Although filed as two separate docket entries, these documents are identical and each requests the same three forms of relief. First, Frank's requests that the Court stay this case until the inter partes reexamination procedures at PTO are completed. Second, if the Court denies a stay, Frank's requests that the Court confirm now that it will admit the entire contents of the PTO's reexamination record into evidence at trial. Finally, if both of the other requests are denied, Frank's requests that the Court certify these issues for immediate interlocutory appeal. The Court will address these three requests in turn. The Court will then turn to the Motion for Partial Summary Judgment filed by NOV.

B. Motions for Summary Judgment

In its pleadings, Tesco asserts that NOV's CRT-350 tool infringed upon its ' 443 and '324 Patents. According to Tesco, NOV's CRT-350 Casing Running Tool has directly, indirectly, contributorily, and/or by inducement, infringed upon claims of both its patents. As of the date that its Motion was filed, NOV had sold a total of eighty-nine (89) accused CRT-350 devices. Prior to the date that Tesco filed its suit under the '443 Patent, August 19, 2008, NOV had received purchase orders for eighty-six (86) accused CRT-350 devices from customers including co-defendants Weatherford, Frank's, and OES.

On March 2, 2010, during the reexamination of Tesco's patents, Tesco filed an Information Disclosure Statement (“IDS”) with the PTO identifying relevant prior art. Within this IDS, Tesco attached an October 11, 2002 email communication, along with several photographs, and referred to this disclosure as “E-mail communication re: Photographs of Public Use of Prior Art System: October 11, 2002.”

II. MOTION TO STAY

Frank's moves to stay the case until completion of the re-examination process at PTO, arguing that substantially all of the claims in the Tesco Patents were held invalid by PTO in its first Office Actions and now by the ACPs, and that therefore the case will be simplified by final rejection of many of the claims in the Tesco Patents asserted against Defendants. Furthermore, Frank's argues that the three confirmed claims asserted against Defendants should have been rejected because the “channel key” feature common to those claims was disclosed in a late-filed prior art brochure that the PTO examiner did not properly consider. Finally, Frank's argues that, even if this Court were to hold a trial and enter judgment on a jury verdict, the Federal Circuit would stay execution of that judgment until PTO and BPAI had completed their re-examination, and then vacate any portion of the judgment that was inconsistent with the result of the PTO and BPAI proceedings.

Tesco responds that the re-examination process in PTO is not yet complete, much less any appeal to BPAI, and that a stay would therefore last several years during which Defendants could continue to infringe the Tesco Patents. Tesco argues that money damages would not provide adequate compensation because continuing infringement threatens to erode Tesco's market share and reputation in the industry. Furthermore, Tesco argues that this case is destined for trial because the three “channel key” claims were confirmed as patentable in the ACPs, and therefore would still be litigated even if this case were resumed several years later.

A. Race to Trial

As a threshold matter, the Court must consider Frank's contention that “[Tesco's] race to trial is futile” because the Federal

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Circuit would stay enforcement of this Court's judgment until the re-examination was complete, and then vacate the judgment where it conflicts with the findings of validity from PTO and BPAI. (Doc. No. 195, at 6-7.) If this contention were correct, a stay would be warranted without further inquiry.

Frank's argues that the Federal Circuit has recently established a policy of awaiting results from re-examination appeals, which it then favors over related district court judgments. In In re Translogic Tech., Inc., the Federal Circuit affirmed BPAI's rejection of all claims in an ex partes re-examination of a patent, despite a prior judgment in district court upholding the patent. 504 F.3d 1249, 1251 (Fed.Cir.2007). During the entire re-examination proceeding and subsequent appeal, the patent infringement case had proceeded in parallel in district court. Id. Two years prior to the BPAI decision, a jury upheld the patent as valid. Id. A few weeks...